Unit 3 · Level 1 · The narrative trap
Guru worship
Imagine 1,000 accounts predicting markets by coin flip. After three calls, about 125 hold a perfect record, and the loudest one is selling a course. You never hear from the 875 who flipped wrong; they quietly delete. The Investing course showed survivorship bias flattering fund tables. The exact same illusion manufactures guru track records.
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What you get asked
A guru nailed 3 market calls in a row. If each call were a 50/50 coin flip, what % of pure guessers would have the same perfect record?
0.5 × 0.5 × 0.5 = 12.5%. Among thousands of accounts posting predictions, flawless short streaks are guaranteed to exist by luck alone.
Why do you mostly encounter gurus with amazing records?
Survivorship bias: the graveyard doesn't post. What you see is a filtered sample pretending to be the whole population.
Only seeing the winners because the losers vanished is ___ bias.
It warps fund tables, backtest results, and guru feeds alike. The missing failures are the most important data, and they're invisible.
Order the classic newsletter scam
Nobody predicted anything. Halving 10,000 people four times leaves roughly 625 convinced they've found a prophet.
A track record is only meaningful if it is…
Full history, big sample, losses on display, ideally audited. Anything less is marketing wearing a spreadsheet. 🐜
The rest of this unit
Stories, gurus, and viral feeds: how a good tale empties a portfolio.